Wellfleet Partners, inc.

Dear Friends:

Over the past several months we have experienced market turbulence previously unknown to Wall Street. Many of your portfolios, especially those that included small cap equities, experienced almost crises management proportions. Those of you that held onto your positions are only now seeing some of them return to prior levels. Investments in the smaller cap markets can often be long term and navigating your portfolio these cycles can be difficult emotionally and require significant handholding. With patience, an accurate flow of information, fundamentally stable emerging growth companies, proper asset allocation, liquidity and diversification, we have lessened the losses created in the wake of the aforementioned volatility. We should now concentrate again on accumulating wealth as we continue to remain committed to preserving capital. To assist investors in their endeavors, the Federal Reserve has infused the financial markets with low cost monies and liquidity and a reduction in the worldwide panic and flight to quality (purchasing Treasuries) seems to have been abated.

A likely scenario (although admittedly analysts and financial experts far better suited to make prognostications than I have been egregiously wrong) is that the economic crisis has been contained but will leave behind a trail of terrible damage especially internationally. Although I am cautiously optimistic, these damages will probably effect corporate earnings for quarters to come and the economic slowdown should persist well into 1999 and perhaps even the Millennium. Of course with our President under siege for his personal conduct, our economy is further threatened by uncertainty. The pressure on the stock market, recovered from its recent lows, should recede short term but only a continued coordinated effort by the Feds and worldwide financial leaders can sustain this stabilization. While conditions appear better, no doubt further downside risk still exists.

A new focus on small to mid cap stocks should emerge, as these lesser known and liquid stocks have been the slowest to rebound. Given the recovery in the domestic economic landscape and investors propensity to make sudden shifts, the smaller cap securities that offer real value make them logical new investments of vogue. The Russell 2000, a commonly used barometer of small, cap stocks, is currently down 15% for the year and 25% from its April peak. Yet small domestic companies are not as exposed to the financial crisis internationally and thus should recover faster than the Standard & Poor's 500. Several companies that I have recommended in the past are in businesses that are both fairly predictable and whose basic demand is strong and should continue as such even during an economic slowdown. Those high on my list: Savoir Technology Group, Inc. (SVTG), a distributor and full service supporter of midrange computer systems, peripherals, network equipment and software. In fiscal 1998, SVTG's revenues will have almost quadrupled to approximately $600 million and it is primed to benefit from its strong affiliation with IBM, its recent strategic acquisitions and expansions internationally. It is also currently developing a professional services network through its subsidiaries and additional acquisitions to meet its high customer demand for consulting and implementing services. We hope to be a part of its corporate finance and capital raising endeavors in 1999; and Response USA, Inc. (RSPN) which sells, installs and monitors residential and commercial security systems. Currently four groups have filed a 13 (D) (greater than a 5% equity interest in the company) on the Company and its largest competitor was recently acquired. In addition, with its recent acquisition of Health Watch, Inc. its monthly recurring revenues are now approximately $1.6 million. Buyouts in the security industry are based on a multiple (60x currently) of monthly recurring revenues. A research report from Gruntal & Co., LLC is available upon request. In particular, I look for companies whose growth in revenues and earnings are rising over 20-25% per year, trading at or below book value and, most significantly, are buyout candidates in consolidating industries. Of the latter, both SVTG and RSPN certainly apply. Please note my family and I are currently shareholders in both companies and that P. Scott Munro, Chairman & CEO of SVTG is a member of our Advisory Council.

Recent market fluctuations and the fast moving economic cycles have closed certain financing doors and opened others. Great opportunities are unfolding in the small cap marketplace especially in the area of private capital investments. Very few Initial Public Offerings are being brought to the marketplace and even more have been either postponed or canceled but the number of emerging growth companies and their corresponding financing needs have not changed. As a matter of fact, in times of great volatility, great wealth through new opportunities can be created. Thus, I am more confident than ever in our business plan and Mission Statement. Wellfleet Partners, Inc. ("WPs") is actively seeking out attractive private investment opportunities as both investment AND merchant bankers and we are getting closer to securing our first transaction. In addition, we are evaluating the purchase of minority interests in several diverse financial service companies (e.g. mortgage banking, insurance brokerage…), the intent being to assist current management with its growth. With the recent sale of assets of my investment banking and stock brokerage firm, I have been at times less than fully accessible. I certainly apologize but I can assure you that Zachary, our Advisory Board and I are working hard to find the right opportunities in the marketplace for you, our valued clients, professional associates and friends. Recently WPs has secured the consulting services of Jeffrey Goldberg, an investment research analyst with 9 years of experience in the financial service industry to bolster our staff. He will assist Zachary and I in our due diligence, finding attractive new private investments, managing them and fund raising endeavors. He should be a credit to our organization. In addition to our aforementioned staff, WPs maintains contacts with numerous individuals whose special expertise may be retained on project-specific basis.

I hope the last 60-90 days have not been too troubling for you investment-wise and please G-d, it will only get better! My suggestion is instead of worrying about the machinations of the financial marketplaces, which we have no control over and at times find incomprehensible, look for new opportunities, trust in your instincts and be thankful for everything we have. G-d Bless and fond regards. I hope to hear from you soon.